Massive looming Canadian rail shutdown could have economic ripple effects throughout America
https:/Avww.cnn.com/2024/08/19/business/canada-rail-strike?cid=ios_app
Canada’s freight rail network could come to a grinding halt this week, inflicting a huge economic toll after the country’s two largest railroad operators on Sunday issued lockout notices to the Teamsters union that represents nearly 10,000 workers.
Failing last-minute deals, both Canadian National Railway and Canadian Pacific Kansas City plan to lock out workers from the early hours of Thursday.
Tt marks the first time that the country has faced a simultaneous labor stoppage at the railroad firms as they normally negotiate their labor agreements in alternate years.
The stoppages could cripple the shipment of food grains, beans, potash, coal and timber which form a large part of Canada’s exports, while also impacting shipments ranging from petroleum products to chemicals and cars.
In addition to billions of dollars of economic damage, the stoppages could disrupt rail trade across the North American continent.
“Unless there is an immediate and definite resolution to the labor conflict, CN will have no choice but to continue the phased and progressive shutdown of its network which would culminate in a lockout,” CN said in a statement.
“Despite negotiations over the weekend, no meaningful progress has occurred, and the parties remain very far apart,” it said.
The Teamsters union argues CN wants to implement a forced relocation provision which would see workers ordered to move across Canada for months at a time to fill labor shortages.
CN says it has made four offers this year on wages, rest, and labor availability while remaining fully compliant with government-mandated rules overseeing duty and rest periods.
The dispute with CPKC centers on safety issues with the union arguing the firm wants “to gut the collective agreement of all safety-critical fatigue provisions,” meaning crews will be forced to stay awake longer, boosting the risk of accidents.
CPKC says its offer maintains the status quo for all work rules, “fully complies with new regulatory requirements for rest and does not in any way compromise safety.”
The Teamsters, which represents yard workers, rail traffic controllers, locomotive engineers and conductors, earlier on Sunday issued a 72-hour strike notice to CPKC ahead of the company’s lockout notice.
It also said in a separate statement to members that the lockout notice issued by CN should be treated “as if we were on strike.”
“We’re serving strike notice to defend the rights and safety of our members,” Paul Boucher, president of the Teamsters Canada Rail Conference said in the statement.
Both CN and CPKC have said their networks outside of Canada will continue to operate but the stoppages could have ripple effects. The two Canadian rail operators” networks connect with several key U.S. rail and shipping hubs such as Chicago, New Orleans, Minneapolis and Memphis. CPKC”s network also extends further south connecting with ports on both the east and west coasts of Mexico.
The federal Liberal government has so far dismissed pleas from business groups to intervene, saying it wants the companies and the unions to sort out their differences via negotiations
‘Rail is our lifeline’: Businesses brace for possible CN/CPKC shutdown amid lockout-strike threats.
https://vww.cbc.ca/amp/1. 7298414
To business executive Daniel Peretz, the possibility of a railway strike or lockout is more than a headline.
“The rail service is our lifeline,” he said. “Without the rail service, we don’t operate the business, we don’t have 13 employees working here, we’re unable to service a very important industry.”
Peretz is president and CEO of NexGen Polymers, a plastics material transloading facility operating out of a rail-served warehouse and office space just east of downtown London, Ont.
Outside the building’s brick walls, there’s a series of railway sidings that together hold about 40 railcars. Each graffiti-covered rail car holds plastic pellets delivered to the site by petroleum companies from across North America and overseas.
Twice a week, a Canadian Pacific Kansas City (CPKC) crew comes to pull away about 10 empties from NexGen and replace them with loaded railcars.
The plastic pellets — each about the size of an unpopped popcorn kernel — come delivered to Peretz’s site in various colours and grades.
The pellets are vacuumed out of the railcars and into storage tanks for testing, mixing and eventual delivery by truck for customers. The manufacturers Peretz sells to turn the pellets into products and packaging that Canadians see on almost every store shelf.
“Plastic water bottles, the overwrap for toilet paper — really every aspect of every component of what we purchase today is made from plastic, from industrial products, to food, to industrial to medical,” he said.
Dispute creates chain reaction
A labour dispute at both Canadian National and CPKC threatens to derail not only Peretz’s business, but the scores of manufacturers he supplies in a complex, just-in-time supply chain. The Canadian Federation of Independent Business has said the lockout could be devastating for small businesses that depend on rail service.
Railways carry more than $1 billion worth of goods each day, according to the Railway Association of Canada, and over half of the country’s exports travel by rail.
Contract talks between the Teamsters union and the companies usually take place a year apart, but in 2022, after the federal government introduced new rules, CN requested a year-long extension to its existing deal rather than negotiate a new one.
This meant both companies’ labour agreements expired at the end 0£ 2023 and talks have been ongoing since.
The companies and the union have accused each other of bad faith bargaining. The teamsters say CN Rail and CPKC are seeking concessions that could endanger worker safety, but both the operators deny that.
On Monday, the union representing thousands of workers at CPKC served a 72-hour strike notice to the railway. CN Rail issued a notice that it intends to lock out workers at that same time unless an agreement or binding arbitration is reached.
As the dispute lurches on, both companies have already started to scale back shipments in preparation for a possible strike or lockout. It’s a high-stakes standoff that could disrupt the two largest links in a crucial, cross- country supply chain impacting multiple industries and businesses.
Peretz has asked CPKC for specifics about if and when his deliveries might be affected, but said he hasn’t been able to get clear answers.
He said any prolonged disruption in rail service would cause widespread challenges in the supply chain. “Our customers would feel it based on the price per pound that they pay for the material,” he said.
In the volumes his business requires, Peretz has no other way to get plastic pellets to his warehouse. It’s a gap, he said, that can’t be filled by trucks.
“A rail car is 200,000 pounds net weight of material … ‘d have to do four trucks to get that same volume,” he said. “You’re adding tremendous cost, tremendous CO2 emissions.”
Peretz isn’t the only business owner who hopes the railways and unions can reach a deal in time to keep the trains rolling.
Crosby Devitt, a grain farmer and CEO of Grain Farmers of Ontario in Kincardine, Ont., said about $43 million worth of grain is shipped in Canada by rail every day.
“Even in our industry, we sometimes underestimate the importance of rail,” he said. “Whenever there’s a threat of a disruption, it’s brought to the forefront.”
Plea to ‘not let this get out of hand’
The timing of the potential shutdown is a problem for him because grain and other crops have to be harvested at a specific time.
If shipping isn’t possible, they could run out of storage capacity very quickly.
On Thursday, federal Labour Minister Steven MacKinnon rejected a request from CN to impose binding arbitration, saying he wants the company to bargain in good faith.
Devitt said the federal government shouldn’t hesitate to step in if the railways and unions can’t reach a deal.
“We know the parties on both sides are engaged to find a solution, but we implore the federal government to not let this get out of hand because no one wins when we have a disruption to the economy on this type of scale.”
